India:
Supreme Court Lifts RBI's Ban On Crypto Currency

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The Supreme Court on March 04, 2020 lifted the ban imposed by
RBI on crypto currency in 2018. The Apex Court's verdict is
being considered a historic verdict, especially for India's
virtual currency industry and start-ups.

RBI's Ban on Crypto Currency Trading

The Apex Court ruling comes as a response to the RBI's 2018
circular dated April 6, 20181, wherein it directed that
all entities regulated by it would hereinafter not deal in virtual
currencies or provide any services facilitating the same. This
echoed the Indian government's sentiments, who have for the
longest time, treated the concept of virtual and crypto currency
with skepticism, issuing repeated warnings against investing in the
same and even going as far as to call them Ponzi schemes. Further,
post the circular, regulated entities that were already providing
such services were told to exit the industry in three months, which
not only led to plummeting trade volumes, but also many exchanges
shutting down their business. As a result of which, the Supreme
Court's present order is quoted to act as a catalyst that ought
to revive the Indian virtual currency industry post its 2018
standstill.

SC- Very Little Evidence to show that crypto currencies pose a
threat to Banking system

The Three-Judge Bench of the Supreme Court in its ruling in the
case of Internet and Mobile Association of India v. Reserve bank of
India2 stated that while the RBI as a central bank has
the power to take pre-emptive actions, the same must be validated
in view of the proportionality to the risk being addressed by such
a ban. "RBI needs to show at least some semblance of any
damage suffered by its regulated entities. But there is none,"
the Court held in its 180-page ruling. There was, in fact very
little evidence to suggest that crypto currencies posed a threat to
the Indian banking system, they observed.

Take Away

While this move seemingly paves the way for crypto currencies to
start right back up, it must be noted, that the 2018 ban wound-up
many such operations, the ramifications of which are going to be
difficult to offset3. The ban on a larger scale
discouraged virtual currency based innovation and caused money and
organizations to shift to far more innovative and lucrative
countries. It also begs the question as to whether merely removing
the legal embargo shall be a smooth sail in renewing the virtual
currency market. With banks being aware of the distrust that the
Indian government has reserved for crypto currencies, the question
remains if they would continue to avoid dealing with the same by no
reason but way of caution. Moreover, with the information on crypto
currencies still being largely nascent in India, it cannot be
ignored that largely, organizations still worry about heightened
issues of money laundering and unregulated competition.

Despite the uncertainty of what this move means for the tech and
crypto currency industry, the judgment is a welcomed eventuality,
especially for crypto-ventures in India and those seeking to enter
it. Across the world, this marks a move that allows the
tech-industry to now tap into India's 1.2 billion strong market
in more avenues. Any hurdles that may remain or come up would be
addressed in the coming time, with the Indian government
recognizing this highly upcoming and moving industry and looking to
create a more nuanced law to deal with the same. Until then, it
looks like India is now a willing player in the bigger picture.

The Payment and Settlement Systems Act, 2007 ("PSS Act") for the first time recognized payments as a different function from a bank's core functions, such as lending, accepting deposits or managing monetary policy

Blockchain Technology is one of the latest technologies in the era of technology. Technology which carries the potential to change the outlook of the way things are done till now and all the orthodox methods which our human brain is habitual to.

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